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April wasn't the best month for producer prices, but overall, inflation remains tame. Producer prices rose 0.3 percent in April, the U.S. Labor Department announced Thursday, as food costs increases offset other wholesale price declines.

Meanwhile, the core rate, which excludes the often-volatile food and energy component, rose just 0.1 percent. Economist surveyed by Bloomberg News had expected both the PPI and core rates to increase 0.1 percent in April. Producer prices fell 1.2 percent in March, and rose 0.1 percent in February.

However, even with the April wholesale price rise, the price pattern over the past year still suggests the greater risk to the slumping U.S. economy is deflation, not inflation. During the past 12 months, the producer price index has fallen 3.7 percent, with the core rate rising 3.4 percent.

Business executives, economists, and in particular Fed officials closely monitor the producer price index because it provides an early-stage warning regarding inflation. In particular, Fed officials pay close attention to the aforementioned, more-indicative core-PPI statistic to gauge core business costs.

Demand reheating inflation?

Lee Ferridge, vice president and senior macro strategist at State Street, told Reuters Thursday those sensing that rampaging consumer demand will reheat inflation are getting ahead of the data.

"Yesterday's retail sales were a blow to the green shoots theory because that theory had been predicated on the resilient U.S. consumer," Ferridge said.

Economic Analysis: A slightly higher-than-expected rise in prices at the producer level in April, but overall inflation remains under control. Wholesale prices have fallen 3.7 percent in the past 12 months -- a stat that Fed officials will view as indicative of near-deflationary conditions, if not an outright sign of deflation. Some economists will point to the 3.4 percent increase in the core rate over the past year as evidence of inflation pressure, but one should ignore the stat; it primarily reflects costs that had worked themselves into the system prior to the recession's start.